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IMF and World Bank caution on potential economic effects of Gaza conflict and Red Sea attacks

The longer the conflict lasts, the risk of spillover goes up

IMF and World Bank caution on potential economic effects of Gaza conflict and Red Sea attacks
[Source photo: Anvita Gupta/Fast Company Middle East]

The ongoing Gaza conflict and attacks on Red Sea shipping pose a growing threat to the global economy, raising alarm bells at the World Governments Summit.

The International Monetary Fund (IMF) and the World Bank cautioned against the potential economic fallout of the prolonged war and disruptions to crucial trade routes.

IMF Managing Director Kristalina Georgieva expressed concern about the conflict’s duration, saying she fears “a longevity of the conflict because, if it goes on and on, the risk of spillover goes up.”

She highlighted the Suez Canal as a significant vulnerability, pointing towards recent attacks by Yemen’s Huthi rebels targeting ships perceived as linked to Israel. According to the UN Conference on Trade and Development, this has already resulted in a significant drop in canal traffic.

While acknowledging the broader economic picture’s positive trajectory, Georgieva stressed the human cost of the conflict. As a woman, as a mother, grandmother… I pray for peace,” she said, echoing the immense human suffering caused by the Gaza-Israel conflict.

Israel’s airstrikes and ground offensive have led to the deaths of at least 28,340 people, primarily women and children, according to Gaza’s health ministry. According to the Palestine Red Crescent Society, an additional 100 lives were lost in Israel’s airstrikes on Rafah overnight Monday.

World Bank President Ajay Banga identified the Gaza conflict alongside other global challenges like the Ukraine war as significant factors impacting the economic outlook. He underlined the potential impact of these combined factors on global growth, urging close monitoring of the situation.

“When you add these variables to what is already turning out to be probably the lowest growth of the last 55 years…. that’s something we have to keep a close eye on,” he said.

The Innovation By Design Summit is in Doha on April 24. Attendance at the summit is by invitation only. Delegates can register here to receive their exclusive invite.

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